Franchise funding
Draw-as-needed or one deposit up front: how to decide for a unit, or a group of units, that is already open.
✓ Merchant Fund Express starts with a soft credit pull. Terms depend on your business's revenue and history.
Updated October 21, 2026 · Merchant Fund Express
Verdict: a seasoned franchise owner (3+ years, FICO 650+) with needs that repeat through the year should take the line of credit, because interest runs only on what is drawn and there is no origination or maintenance fee. A younger unit, or one that needs a single larger amount now, fits working capital: one deposit sized to the unit's bank activity. Merchant Fund Express offers both to existing franchise owners and decides the same day on a complete file.
A franchise unit spends in two patterns. Some costs repeat: a seasonal inventory build, a payroll week that lands before card settlements, an ad fund debit in a slow month. Others arrive once: a franchisor-scheduled refresh, a new menu board package, a deposit for a second unit. The line of credit fits the repeating pattern; working capital fits the one-time pattern, especially when the unit is under 3 years open.
For the general product mechanics, see business line of credit and working capital. This page is about how a franchise file tips the decision. Final terms depend on the business's revenue and history.
| Line of credit | Working capital | |
|---|---|---|
| Amount | $10,000 to $350,000 limit | One deposit sized to deposits ($25,000 to $5,000,000 range) |
| Term | 12 to 36 months | Fixed schedule set by the offer |
| Pricing | From 1% per month on the drawn balance | Total repaid set at signing |
| Fees | 2.49% per draw; no origination, no maintenance | Compare total dollars repaid |
| Minimum use | $10,000 per draw | Full amount arrives at once |
| Early repayment | No penalty | Ask before signing |
| Qualification | 3+ years, FICO 650+, $25K a month with 8+ deposits | 6+ months, FICO 600+, $60K verifiable revenue |
| Existing positions | Can sit in second position | Up to 2 current advances |
Multi-unit groups usually hold each unit in its own entity, and Merchant Fund Express reviews the entity that will carry the payment. That creates a practical split:
More on structure: multi-unit franchise funding.
Choose the line of credit when:
Choose working capital when:
Hypothetical: one entity, open 5 years, FICO 690, deposits of $150,000 a month. It needs a $30,000 seasonal inventory build 4 times a year (each repaid within 2 months) and $90,000 for a franchisor-scheduled refresh.
| Line | Figure |
|---|---|
| Seasonal draw fee | $30,000 x 2.49% = $747 |
| Seasonal interest at 1% a month, 2 months | $30,000 x 1% x 2 = $600 |
| Cost per seasonal cycle | $747 + $600 = $1,347 |
| Four cycles in a year | $1,347 x 4 = $5,388 |
| Refresh draw fee | $90,000 x 2.49% = $2,241 |
| Refresh interest, average $45,000 drawn for 10 months | $45,000 x 1% x 10 = $4,500 |
| Line total for the year | $5,388 + $2,241 + $4,500 = $12,129 |
| Working capital alternative: $120,000 up front, $151,200 repaid | $151,200 - $120,000 = $31,200 |
The line costs less here because inventory cash is only borrowed while it is on the shelf. A unit open 14 months with FICO 620 cannot open the line; for that owner, working capital is the product that fits.
Figures in this example are illustrations of the arithmetic, not an offer, quote or approval. Real terms depend on the file and the funder.
Full checklist: franchise funding documents.
If the single need is equipment with a vendor quote, compare equipment financing vs working capital. For seasonal units, see franchise seasonal cash flow. Merchant Fund Express covers every product an operating franchise owner uses; the franchise funding hub lists them all, and our general business loan vs line of credit page explains the generic trade-off.
No. Interest applies only to what is drawn, from 1% per month, plus a 2.49% fee per draw.
Yes. The line can sit in second position; existing positions are counted when the limit is set.
Both get a same-day decision on a complete file. The difference is the qualification tier and how the money is used.
$10,000 per draw.
Each entity is reviewed on its own deposits, so each can apply; the one that qualifies for Tier 1 can hold a line.
Merchant Fund Express treats them as normal recurring costs and sizes capacity after them, like rent.
Merchant Fund Express reviews your location's revenue, deposits and existing payments. Same-day decision on a complete file; funding often the next business day. About five minutes to apply.
